• Bitcoin and Ether prices dropped on Monday, due to inflation data and stablecoin regulation worries.
• The New York Department of Financial Services ordered Paxos to stop minting new Binance USD tokens (BUSD).
• Investors are looking ahead to the U.S. Federal Reserve’s consumer price index (CPI) report due Tuesday.
Cryptocurrency Prices Drop
Bitcoin and ether, the two largest cryptocurrencies by market value, both dropped on Monday as investors grew concerned over inflation data and regulatory activity in the stablecoin sector. Bitcoin fell 1.4% to trade around $21,640 while ether slipped below $1,500.
Regulation Worries Weigh On Stablecoins
The New York Department of Financial Services issued an order mandating Paxos to stop minting new Binance USD tokens (BUSD), citing that it was not being administered in a “safe and sound” manner. This caused BUSD – a fiat-backed stablecoin with a 1:1 value against the U.S. dollar – to fall to 0.9950 cents against its rival tether (USDT) on the Binance exchange.
Federal Reserve Inflation Report Looms
Investors will be watching closely for Tuesday’s consumer price index (CPI) report from the U.S Federal Reserve, which could provide insight into future monetary policy decisions and potential interest rate hikes. The CPI dipped to 6.5% in December and Fed governors remain worried about over-tightening money supply potentially leading to recessionary conditions in the economy.
Recent Regulatory Developments Impact Crypto Markets
The crypto markets have been bearish of late due to recent news developments such as Kraken agreeing to shutter its staking service in the U.S., paying a $30 million fine in a settlement with the U.S Securities & Exchange Commission, and other regulatory activity surrounding stablecoins such as Paxos’ BUSD token mentioned above..
Where Will Bitcoin Go Next?
With bitcoin having fallen roughly 9% this month from its January surge high of over $24k, analysts are predicting that BTC will find support at $20k in upcoming weeks depending on what happens with inflation data and other regulatory actions affecting crypto markets going forward..